Single Supplier Deals Becoming Outsourcing Anachronism

There's nothing like a little retrospection to help put decisions in perspective -- and hopefully, to aid in future decisions.

That's the primary takeaway from an interesting Computerworld Australia article that features comments from Mary Ann Maxwell, who created and managed a 10-year, multi-million dollar IT services deal with IBM for financial services firm Westpac, and Jim Gross, who managed a similar deal with IBM for Washington Mutual after leaving Westpac.

Both Maxwell, who now works for Gartner, and Gross appear to agree with the prevailing industry opinion that the single-source mega-deal has become somewhat of an outsourcing anachronism. The numbers of such deals are definitely dwindling, though they haven't gone away entirely.

Gross says he would never again enter into such a deal because "it's too difficult to maintain accountability and maintain passion."

Though she would be less likely to sign a single supplier deal today, Maxwell does believe it was the right decision at the time and wouldn't rule out doing so again under appropriate circumstances.

Most organizations today are looking for a range of skills that they are unlikely to get from a single supplier and are less focused on simple cost reduction than on improving business capabilities, says Maxwell. With years of experience now behind them, they are also more comfortable managing outsourcing relationships.

Management is key in making multiple source outsourcing arrangements work, experts agree. "Strong project management is what makes this happen," an executive with insurer Swiss RE notes in an Insurance Networking News article that discusses his company's partnerships with two ASPs and employment of contract workers in the U.S., Hungary and India.